Meme stocks may have hit stratospheric highs earlier this year, but the smart money was looking closer to the ground.
Members of an elite group of multimillionaires called Tiger 21 have configured their portfolios around real estate. That’s the largest chunk of their portfolios, 27%, followed by 26% in private equity and 22% in public equity.
Much of this focus is on industrial property. Michael Sonnenfeldt, founder and chairman of the group, says the sector “is on fire.” Club members are strategizing around “what has changed forever in real estate,” he said. One seemingly forever change: the importance of distribution centers, given their role in the digital delivery chain.
But the residential market is hot, too. House prices in 20 U.S. cities surged in December. Phoenix, San Diego and Seattle posted the biggest gains as buyers looked for suburban shelter. It’s not just an American phenomenon, either: In January, new home prices in 70 major Chinese cities, excluding state-subsidized housing, rose 0.28% from December. (Hong Kong also clocked in as the world’s least-affordable housing market.) And even in Britain, which has been under a strict national lockdown since early this year, house prices rose last month.
The fuel has been historically low mortgages rates. Low inventory is also playing a big role here. One driver in the U.S. is the fact that empty nesters — people who might leave large houses when their children move out — are increasingly staying put. A record 25% of U.S. homeowners have lived in the same house for more than 20 years. That is up from 14.3% in 2010, according to a 2020 study by brokerage Redfin Corp.
The question now is whether it can last.
If you’re thinking of taking the plunge, Ilyce Glink, author of “100 Questions Every First Time Home Buyer Should Ask,” wants you to reckon with these questions first:
- How long do you plan to stay in the area?
- How much money do you have for a down payment?
- If companies require workers to begin commuting again, will that large, leafy property in the suburbs still seem as attractive?
- How set are you financially with your job?
- Do you see a career change ahead?
- Are you prepared to spend much more on maintenance and taxes than you have as a renter?
You might prefer to just browse. So take a hint from this recent Saturday Night Live skit, and just enjoy looking at listings online. — Charlie Wells
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What We Did Recently With Our Money
Pre-Covid, I traveled quite a bit for both business and pleasure. So after 11 months at home, I was really itching for a week away. It almost didn’t matter where; I just needed to spend a few days staring at a different set of walls. Help arrived in the form of an offer from my aunt and uncle: I could stay in their house, which is about a two-and-a-half hour drive from mine, while they decamped to a condo they own. (These days, no one wants to mingle households.) I know not everyone has an accommodating set of relatives with a spare residence, but most of us have friends and family who are also going stir crazy. Offering to swap houses or apartments for a week or two might give you both a chance to reset — and at a very affordable price. To make it really feel like a vacation — with a minimum of cooking and cleaning — I agreed to pay for the cost of a cleaning service to tidy up after our departure and decided to splurge on takeout from local restaurants. Even so, I’m saving probably $2,000-$3,000 on accommodation, going by local Airbnb prices for houses of similar size. — Sarah Green Carmichael
